Passenger cars sales in the country registered double digit growth in June 2014, for the first time in 10 months; bringing some amount of relief for the automobile industry that has been reeling under prolonged slowdown.

Domestic passenger car sales increased 14.76 per cent to 1,60,232 units in June as compared to 1,39,624 units in the year-ago month, according to data released by industry body SIAM.

Talking about the reasons for up-tick, SIAM President Vikram Kirloskar said, “Positive sentiments created by formation of stable government along with speculative buying as people went ahead with their buying plans due to no clarity on extension of excise duty beyond June 30, helped the passenger car sales post double digit growth in June after ten months (after August 2013)."

He added that while there are some early signs of revival in demand, the business environment continues to be a challenge and it needs to be seen whether the industry will be able to sustain the growth in the coming months.

While sales in the commercial vehicles segment continue to be in the negative territory, the vertical has seen slight improvements over the past three months.

"For the last three months constant improvement is happening in the commercial vehicle space. Though, it still remains in the negative territory, the opening of some of the mining and infrastructural projects has helped the sector," SIAM Director General Vishnu Mathur said.

Sales of commercial vehicles were down 9.03 per cent to 51,119 units in June.

Meanwhile, asked about huge discount car makers are currently doling out to spur sales, Mr. Kirloskar said, “I expect that discounts would start tapering. The industry won't be able to afford it as input costs as also rising. Car companies need to make money to reinvest."

He added that with the amount of inflation it is not possible that there will be no price hikes. “Steel prices have also risen, which will impact our bottomlines. I expect there will be a price hike. While each company has its own policy, general trend is that if input costs go up, prices will be increased,” he said.

According to SIAM data, passenger vehicles category saw sales grow by 11.23 per cent at 2,18,828 units as against 1,96,726 units in June last year, thus posting a double digit growth after 20 months.

In the two-wheeler segment, sales grew by 12.99 per cent in June to 12,61,589 units from 11,16,538 units in the same month of the previous year. While motorcycle sales were up 9.63 per cent to 8,76,196 units, scooter sales jumped 25.15 per cent to 3,23,178 units.

Total sale of vehicles across categories registered a growth of 12.15 per cent to 15,78,884 units in June 2014 as against 14,07,875 units in the same month a year ago.